Meiya Power postpones HK listing

PUBLISHED : Wednesday, 04 June, 2003, 12:00am
UPDATED : Wednesday, 04 June, 2003, 12:00am

The utility's chairman blames China's regulatory regime and the poor global mood in the sector following Enron's collapse

Independent power producer (IPP) Meiya Power has postponed a Hong Kong listing planned for this year, blaming poor international investor sentiment and regulatory concerns over China's power market.

In February, the North American-funded company said it planned to pick a lead underwriter from a shortlist of candidates by last month ahead of launching an initial public offering (IPO) to raise up to US$400 million.

Chairman Colin Tam said yesterday Meiya had decided to delay its listing plans after discussions with the investment banks pitching for the IPO deal.

He said international investment sentiment in the power sector remained poor after the collapse last year of the US energy giant Enron.

'Many companies in the sector are still suffering from financial difficulties which have affected investor interest and valuation of power companies,' Mr Tam said.

'We have therefore postponed our plan to list this year and will evaluate other options,' he said, adding the delay would affect the company's expansion pace.

Mr Tam said Meiya was not alone in facing fund-raising problems, pointing out other international IPPs were trying to sell assets to lower their debt load.

China's regulatory regime, perceived by foreign IPPs to be increasingly unfavourable to them, was also blamed for dampening sentiment.

Mr Tam, chairman of the Independent Power Producers Forum, said previously that approved returns on equity of new mainland projects had fallen from 15 per cent to as low as 8 per cent as the regulatory regime changed over the years.

Foreign IPPs have also complained it is difficult to enforce power purchase agreements in China.

Meiya had intended to use the proceeds from its planned IPO to finance the purchase of controlling stakes in two power plants in China, South Korea or Taiwan this year, and four more next year.

The acquisitions would more than double its generation capacity from 2,628 megawatts (MW) to 5,628 MW within 18 months.

The company has eight power projects in China, one in Taiwan and one in Korea.

Meiya is 50 per cent held by US-based international energy producer PSEG Global, 30 per cent by Asia Infrastructure Fund - a US$779.5 million equity fund investing in Asian utilities - and 20 per cent by Canada's Hydro Quebec, one of the world's largest hydropower producers.

Nomura Securities analyst Pierre Lau said foreign investors were increasingly losing out to China's five state-owned power giants in winning new projects, as the mainland companies had access to cheap domestic bank and capital market financing.

Power struggle

Approved returns on new mainland projects have fallen from to 8 per cent from 15 per cent

Foreign firms are losing out to China's five state-owned utilities in winning new projects